Obamacare

The Status Quo depends on the professional/managerial class to maintain order and keep the machine running. Since this class has more options in life than less educated lower-income workers, their belief in the fairness and stability of the Status Quo is essential: should their belief in the Status Quo weaken, so would their commitment to positions that require long work days and abundant stress....At every juncture where a decision to opt out (quit) or continue serving the Status Quo arises, the believer is co-opted by their desire to "stay in the game" for the promised slice of wealth and security. The risk-return calculus is heavily skewed to complicity, because the options for wealth and security outside the machine are meager and loaded with risk. It is my contention that the wealth and security promised by the machine in exchange for subservience are phantom, and the risk of the promises not being kept is much higher than generally assumed. ironically, those who opt out and accept the risk and lower compensation are actually more secure and much wealthier (in terms of well-being and autonomy) than those who submit to voluntary capture.

When Ben Bernanke launched QE 2 in 2010 he outlined a third mandate for the Federal Reserve - the boosting of consumer confidence. He stated that the goal of QE 2 was to boost asset prices in order to spur consumer confidence through the "wealth effect" which should translate into economic growth. In 2010 he was right, and QE 2 not only boosted asset prices sharply, but kept the economy from slipping into a recessionary spat. As Friday's speech from the economic summit in "Jackson Hole" draws near - Bernanke should be taking a clue from today's release of consumer confidence in considering his next move. 

Since the GOP presidential candidate still refuses to give any substantial details on how the republicans plan to grow the country, not to mention fund the budget deficit (even as various pageview hawking blogs concurrently try to give the impression that private equity prospectuses stamped with the "confidential" seal for purely regulatory reasons will somehow provide an insight into the Bain Capital CEO's taxpaying practices, confirming that "finance for the masses" may not be the best idea), those who wish to gain some insight into the actual workings of Romney's brain may have to resort with the following Op-Ed published overnight in the WSJ titled, "What I Learned at Bain Capital: My business experience taught me how to help companies grow—and what to do when trouble arises. When you see a problem, run toward it before the problem gets worse." Read it - it may well be the only public policy "prescription" out of the republican before the election.

Romney's selection of Paul Ryan as his veep clarifies the policy debate (forcing typically middle-of-the-road voters to become more polarized to the size of government) into the November election and materially changes the odds of the fiscal cliff's resolution. As Morgan Stanley's Vince Reinhart notes, "by tying one side to an explicit plan for fiscal consolidation, the Ryan selection makes it much more likely that the campaign will focus on the appropriate role of the government.  That is, the debate will be about the right level of federal expenditure relative to national income, the progressivity of the tax system, and the extent to which family incomes are protected on the downside by Washington, DC." Although theoretically the Ryan pick raises the chance of a benign, before-the-election resolution to the fiscal cliff 'issue', it also worsens the likely outcome if the legislative stand-off continues into 2013 - which the odds suggest is the case.

In the past 50 years, the way health care is financed has changed, with private payers and public insurance paying for more care. The California Healthcare Foundation has created this excellent interactive graphic shows who paid for the nation's health care and how much it's costs have shifted since 1960. The tree-map provides an intriguing exposition of the 'relative costs' but as The Economist adds, with regard the 'absolute costs': American healthcare costs increased by roughly 100 times, from $27 billion in 1960 to $2.6 trillion in 2010.

Two days ago, historian Niall Fergsuon had the temerity to voice a personal opinion, one which happens to not exactly jive with the rest of the media's take on current events, on the cover page of Newsweek (Newsweek is still in print?) titled, succinctly enough, "Hit the road Barack: Why we need a new president." The response was fast, furious, and brutal, particularly emanating from what Ferguson has dubbed the "liberal blogosphere." Naturally in an election year, said blogosphere has much CPM-generating rumination to do (after all who knows what happens to all those ad revenues if the US corporate base implodes and all that cash on the sidelines stays there due to "policy uncertainty"), so Ferguson merely provided the chum in the water (once the time comes to pick up the calculators again after the presidential election, things will immediately quiet down but until then there is, sadly, at least two more months of ever rising cacophony). So did Ferguson back off having said his piece? Hell no. In fact, he has just made sure that the "liberal blogosphere" is will be burning the midnight oil for weeks to come engaged in completely meaningless point-counterpoint between itself and the historian, when, in reality nothing changes the simple fact that come August 2016, the US will have a simply idiotic 130%+ debt/GDP completely independent of who is in the White House, or in other words, there very well may not be another presidential election. For now, however, we have much needed bread and circuses. Below is Ferguson's just released interview from Bloomberg TV in which he responds to the salient accusations that have been leveled at him (a more essayistic version can be found here).

Don't worry, the 'fiscal cliff' will all be taken care of; have no fear, the market AAPL will hold up into the election to sustain Obama's hope-and-change; and, as The Heritage Foundry blog reports, in that change, there are 18 new tax hikes on their way via Obamacare.

In four months the debate over America's Fiscal cliff will come to a crescendo, and if Goldman is correct (and in this case it likely is), it will probably be resolved in some sort of compromise, but not before the market swoons in a replica of the August 2011 pre- and post-debt ceiling fiasco: after all politicians only act when they (and their more influential, read richer, voters and lobbyists) see one or two 0's in their 401(k)s get chopped off. But while the Fiscal cliff is unlikely to be a key point of contention far past December, another cliff is only starting to be appreciated, let alone priced in: America's Demographic cliff, which in a decade or two will put Japan's ongoing demographic crunch to shame, and with barely 2 US workers for every retired person in 2035, we can see why both presidential candidates are doing their darnedest to skirt around the key issue that is at stake not only now, be every day hence.

Many folks were surprised Friday night as rumors began leaking that Romney tapped Paul Ryan of Wisconsin, for the prestigious VP slot. The surprise came largely because many were expecting a more mundane pick like Tim Pawlenty or Rob Portman.  The reactions from the GOP base is positive overall, although the story is still fresh and drawing conclusions is difficult.  The reactions from the Democrat/Liberal base are predictable and we are guessing that the Obama campaign is licking its lips over the prospect of skewering Ryan like a kabob. We have a slightly different take, my feeling is that this pick is an indication that the Romney team is struggling and sees the prospect of winning in November diminishing with each passing day. People like Pawlenty and Portman is the equivalent of swinging for a base hit - the selection of Ryan is swinging for the fences.  It is desperation and an attempt to shake things up substantially in the hopes of energizing a splintered and unimpressed Conservative base. However we prefer to focus on the economics of politics, not the politics of politics - so lets take a look at what exactly makes Ryan such a risk.

Putting our trust and faith in a few unelected bureaucrats and bankers, who use their obscene wealth to buy off politicians in writing the laws and regulations to favor them has proven to be a death knell for our country. The captured main stream media proclaims these men to be heroes and saviors of the world, when they are truly the villains in this episode. These are the men who unleashed the frenzy of Wall Street greed and pillaging by repealing Glass Steagall, blocking Brooksley Born’s efforts to regulate derivatives, encouraging mortgage fraud, not enforcing existing regulations, and creating speculative bubbles through excessively low interest rates and making it known they would bailout recklessness. They have created an overly complex tangled financial system so they could peddle propaganda to the math challenged American public without fear of being caught in their web of lies. Big government, big banks and big legislation like Dodd/Frank and Obamacare are designed to benefit the few at the expense of the many. The system has been captured by a plutocracy of self-serving men. They don’t care about you or your children. We are only given 80 years, or so, on this earth and our purpose should be to sustain our economic and political system in a balanced way, so our children and their children have a chance at a decent life. Do you trust that is the purpose of those in power today? Should we trust the jackals and grifters who got us into this mess, to get us out?   

I think it’s safe to say with some conviction that in the year of 2012 the concept of survival prepping is NOT an alien one to most Americans.  When National Geographic decides there is a viable market for a prepper TV show (no matter how misrepresentative of true preppers it may be), when Walmart starts stocking shelves with long term emergency food storage kits, when survivalism in general becomes one of the few growing business markets in the midst of an otherwise disintegrating economy; you know that the methodology has gone “mainstream”.  There is a noticeable and expanding concern amongst Americans that we are, indeed, on the verge of something new and unfortunate.  Is it the big bad hoodoo of the soon to expire Mayan Calendar?  For a few, maybe, but for the majority of us, no.  That jazz is a carnival sideshow designed to make the prepping culture appear ridiculous.  We don’t need to believe in magical prophecies to know that there is a catastrophic road ahead; all we have to do is look at the stark realities of our current circumstances.  It does not take much awareness anymore to notice looming fiscal volatility, social unrest, the potential for unrestrained war, and the totalitarian boldness of our government.  I’ll take the wrath of Quetzalcoatl any day over the manure storm that is approaching us currently.

That the US government's activities as a share of GDP have gone from well under 10% at the beginning of the last century to over 40% today – and will go over 50% by the time Obamacare is fully implemented – makes it clear that this country is now operating on principles that run completely contrary to those that promote success and economic well-being. The consequence of continuing to operate on this model will be a steady decline in the quality of life for most Americans, while favoring a ruling elite that produces nothing… except more roadblocks.

A few weeks ago America had to go through the supreme political theater that was the SCOTUS' unprecedented and uber-political decision on Obamacare, which in attempting to overcome allegations of partisanship, only succeeded in reinforcing these even deeper. Now, with everyone expecting Bernanke to launch QE every time there is a 1% downtick in the Russell, our honorable Chairsatan is in the same position: he needs to do something but can not afford to appear political with the presidential election just over 3 months away. In other words, from the soap opera about the Supreme Court of the US, we now move to the one about the Supreme Federal Reserve of the US. And the trouble for those whose investment strategy is hope and prayer is that the Fed is becoming aware of this reflexive phenomenon, and just for that reason may delay QE until September, by which point the US, and global economy, will be in freefall.

Engine of growth?; job creators?; Obamacare sufferers?; the sad reality is that small business in the US has just rolled over. From a slow leak higher in confidence this year, Small Business Confidence has just plunged by its largest in 24 months to its lowest level since October 2011. Seems like perfectly timed for a fall election.

This scathing assessment of Obama’s economic policies is by no means an endorsement of Mitt Romney or his economic plan, since he has never provided a detailed economic plan. After four years of a Romney presidency, the national debt will also be $20 trillion as his war with Iran and handouts to his Wall Street brethren replace Obama’s food stamps and entitlement pork. There was only one presidential candidate whose proposals would have placed this country back on a sustainable path. The plutocracy controlled corporate mainstream media did their part in ignoring and then scorning Ron Paul during his truth telling campaign. The plutocracy wants to retain their wealth and power, while the willfully ignorant masses don’t want to think. The words of Ron Paul sum up what will occur over the coming years as the interchangeable pieces of this corporate fascist farce drive the country to ruin.  The politicians, bankers and corporate titans running this country are too corrupt and cowardly to reverse the course on our path to destruction. The debt will continue to accumulate until our Minsky Moment. At that point the U.S. dollar will be rejected and chaos will reign. The Great American Empire will be no more. At that time sides will need to be chosen and blood will begin to spill. Decades of bad decisions, corruption, cowardice, ignorance, greed and sloth will come to a head.

The verdict of history will not be kind to the once great American Empire.